Apollo Group (Nasdaq: APOL) is lower heading into their first
quarter earnings report, expected out after the market closes
today. Shares are down5.1% this afternoon.
APOL is expected to report an EPS of $1.35 with revs of $1.26
billion. Last quarter, the University of Phoenix parent company
reported an EPS of $1.31 on revs of $1.26 billion, both just about
in-line with the consensus. Last year, in Q110, Apollo produced an
EPS of $1.47 on revs of $1.27 billion, beating estimates calling
for an EPS of $1.46 and revs of $1.23 billion.
APOL shares dropped 21.6% through the quarter, to $34.00 at the end
of November. The stock is up 6.2% since then, and finished 36%
lower in 2010.
A simple valuation puts APOL with a forward EPS of 8.1x FY12 EPS
estimates, compared to 10.1x for Corinthian Colleges Inc. (Nasdaq:
COCO), 8.8x at DeVry, Inc. (
), and 10.7x for Strayer Education Inc. (Nasdaq: STRA).
Data from Bloomberg has 9 analysts with a Buy on APOL, 15 with a
hold, and none suggesting to Sell. The analyst price target average
is $48, with a high of $69 and low of $35.
For-profit company shares are seeing weakness today following an
announcement by Strayer that new enrollment for their Winter
session fell 20% from last year. STRA shares fell over 20% on the
news today, and the sentiment is spreading across the sector.
Deutsche Bank recently gave an update for timing on Gainful
) criteria that will be placed on for-profits. DB thinks that the
new regulations will be available later in January (and possibly
spring), as opposed to a mid-January target which a U.S. Department
of Education Director said in early December.
On GE, Deutsche says, "House Ed Chairman Kline has publicly called
for Sec Duncan to "change his approach" to GE or face a potential
legislative challenge ‐ but with a split Congress, this is an empty
threat. The only hope for a major change to GE would be a
compromise between the DoE and Republicans, but that is a low
probability event, in our view."
Deutsche is looking for an EPS of $1.49. They have a Buy rating on
the shares and a price target of $60.
Barrington Research expects an EPS of $0.92 with revs of $1.092
billion. New degreed enrollment is expected to fall 41% to 57,840
students and total degreed enrollment falling 10.6% to 407,485.
Barrington notes that while management's initiatives (mandatory
orientation program, changes to admission personnel compensation
structure, reduced reliance on third-party lead generation) may
cause a drop in enrollment, revs and earnings in the near-term, a
longer-term outlook is becoming increasingly positive as "these
initiatives will invariably lead to an improvement in the overall
student experience (better completion/graduation rates and, as
such, better bad debt/default/repayment rates) and higher quality
and more predictable/profitable results."
Apollo Group is expected to release their Q111 earnings on Monday,
January 10, 2011, at approximately 4:00pm EST. Stay tuned to
section to see our analysis of the highly-anticipated quarterly
results withi0 n seconds of their release.